A D.C. City Council committee yesterday buried the Council's ambitious but increasingly unpopular plans for a $700,000 investigation of leasing, hiring and personnel practices in several city agencies, including the Department of Human Resources.

Agreeing that the price tag was too high and the anticipated results probably would be useless, the Council's committee of the whole, which has jurisdiction over budget matters, decided overwhelmingly to scuttle plans for the probe.

The committee voted instead to order the Council's government operations committee to do a less ambitious probe - that will probably cost $150,000 or less - to determine areas of possible abuse in leasing, hiring and contracting systems and to recommend legislative remedies.

The allocation of a considerably smaller amount plus the change of focus in the probe made it all but certain that the council will not develop definitive answers on more than three-dozen allegations of abuses that have been reported in newspapers since Nov. 18.

Ten weeks ago, when the accusations of abuse in DHR were making daily front-page headlines and several probes set by Major Walter E. Washington were shrouded in uncertainty, many Council members were calling for a full scale and complete Council investigation.

Those attitudes have cooled considerably in recent weeks, however, as preliminary findings from four other city probes into some of the allegations have underscored chaotic personnel operations in DHR, but found little hard evidence of individual cases of favoritism in hiring and promotions.

"I looked at a lot of smoke then and we didn't find much fire," said Council member Marion Barry (Dat large), who had been one of the strongest early advocates of an exhaustive Council investigation. "I'm ready to admit that maybe we reacted too hastily. . . "

Council member Arrington Dixon (D-four), whose government operations committee had voted last week to conduct a probe but left the finding for it unresolved abandoned his previous stance of urging that the investigation go ahead.

When asked by a colleague what reason he could give for the probe, Dixon responded, "They only answer I can give is that there seems to be some erosion of public confidence in our personnel system."

"The only way we're going to get confidence in the personnel system is to change it, not investigate." Council member John A. Wilson (D-two) said. "If you have problems with a car that doesn't run, you trade it in."

The Council first announced plans for an investigation in early December. By the time Dixon disclosed on Jan. 11 that such a probe might cost $750,000, Council sentiments already were turning against such an investigation.

Dixon suggested last week that the money come not from city funds but from a special commission set up by Congress to oversee the city's financial management system.

During the past days, however, Council leaders have been told that this commission was not likely to appropriate the funds for the probe. According to reliable Council sources, Dixon had never strongly favored the probe itself, feeling that its scope would be too large and the Council's efforts could be better spent trying to legislate improvements in hiring and procurement procedures.

Yesterday's action gives Dixon his wish - a greater Council emphasis on legislative changes in the system. In addition, the $150,000 is likely to be spent on temporarily increasing the staff for his committee to carry out the extra work.